Google’s New Search Features Help it Defend $576 Value

Google (NASDAQ:GOOG) recently unveiled a few new features related to its search business. ^[1] These features include voice search for desktop Chrome users, image search on the desktop browser and Instant Pages for faster search results. Google continues to dominate in the search advertising market where it competes with Microsoft (NASDAQ:MSFT), Yahoo (NASDAQ:YHOO) and AOL (NYSE:AOL). Search is the most valuable business for Google, and accounts for about 67% of our $576 price estimate for Google stock.

Our price estimate for Google stock stands about 15% above market price.

Google dominates the search market

Google global search ad market share was around 68% as of 2010, and we expect it to continue to increase. Although Microsoft’s Bing has consistently gained share in the U.S. search market over the past year, this has not made a dent in Google’s market share. ^[2] In fact, according to a recent U.S. search market report, Google gained market share while Bing’s market share remain constant for the first time since July 2010. ^[3]

New features will help it maintain its lead

Google has introduced quite a few innovative products in the market over the past year, which includes Google Instant. The recent announcement brings voice search on desktops, which was earlier available on mobile phones. The announcement also includes image search on desktop in which user can upload any image or incorporate an image URL into Google search for the identification of that image. Finally, the most impressive feature that Google released is the ‘Instant Pages’ feature in which after the user enters the search keyword, the top search result will be ready in the background so that when the user clicks on that link, it will load instantly. According to Google, this feature could save user an average of 5 seconds.

See our complete analysis for Google

1. Knocking down barriers to knowledge, The Official Google Blog, 14th June 2011 [↩]
2. By comparing Comscore’s July 2010 report with April 2011 report, you will find that Bing’s market share increased from 11% to 14%, while Google’s slightly declined from 66.2% to 65.4% [↩]
3. comScore Releases May 2011 U.S. Search Engine Rankings, June 10th 2011 report [↩]